Smith v. Hughes Aircraft Co. Corp.

• Decision Date: 06 September 1991
• Docket Number: No. CIV 88-406-TUC-WDB.,CIV 88-406-TUC-WDB.
• Citation: 783 F. Supp. 1222
• Parties: Ronald John SMITH, et al., Plaintiffs, v. HUGHES AIRCRAFT COMPANY CORPORATION, Defendant. All Consolidated Cases.
• Court: U.S. District Court — District of Arizona

783 F. Supp. 1222

Ronald John SMITH, et al., Plaintiffs, v. HUGHES AIRCRAFT COMPANY CORPORATION, Defendant.

All Consolidated Cases.

No. CIV 88-406-TUC-WDB.

United States District Court, D. Arizona.

September 6, 1991.

John W. McDonald, Chandler Tullar Udall & Redhair, Tucson, Ariz., John R. Tomlinson, Lane Powell Spears Lubersky, Seattle, Wash., for plaintiffs Smith, Nat. Union Farm, John Gale, Phillip Freeman and Am. Home Ins.

Thomas M. Murphy, Murphy Goering Roberts & Holt, P.C., Tucson, Ariz., Thomas F. Connell, Wilmer Cutler & Pickering, Washington, D.C., for Ins. Co. of North America.

William H. Doyle, Doyle & Malinske, Phoenix, Ariz., Jeffrey A. Siderius, Hinshaw Culbertson Moelmann Hoban & Fuller, Chicago, Ill., for Argonaut Ins.

Bruce A. Featherstone, Kirkland & Ellis, Denver, Colo., Janet C. Bostwick, Molloy Jones & Donahue, P.C., Tucson, Ariz., for Hughes.

Stephen G. Schrey, Crosby Heafey Roach & May, Oakland, Cal., Steven D. Copple, Copple Chamberlin & Boehm, P.C., Phoenix, Ariz., for Hartford Ace.

ORDER

WILLIAM D. BROWNING, Chief Judge.

Pending before the Court are the Parties' phase-two summary judgment motions. Also pending are preliminary motions filed by Hughes. With this Order, each motion is addressed.

I. HUGHES' PRELIMINARY MOTIONS

Hughes has filed two preliminary motions: (1) motion to determine the sufficiency of Insurance Company of North America's ("INA") objections and responses to Hughes' first and second requests for admission; and (2) motion to strike affidavits of David Schoeggl.

A. Sufficiency of Requests for Admission

On December 3, 1990 and January 10, 1991 Hughes served INA with requests for admissions. Hughes' requests for admissions address a broad range of documents including regulatory pronouncements, insurance service organization documents, and pollution claims by other policyholders. Hughes requested admission to the genuineness, authenticity, and hearsay qualities of the many documents. Hughes moves the Court to determine the sufficiency of INA's responses and objections to 54 of the requests.

INA's objections largely rest on relevance and on this Court's earlier order denying Hughes' motion to compel these documents. The Court will overrule INA's objections and directs INA to admit or deny the requests for admissions.

While this Court declined to compel the document's production, that ruling was based on INA's burden with respect to their marginal relevance. Clearly, the burdensome nature has been ameliorated.

With this Order, the Court has ruled on the extant phase-two motions. To the extent that Hughes wishes to submit any of the admissions as substantive evidence that are not already before the Court, they are untimely and too late to be considered in connection with phase-two motions.¹ Hughes may submit any and all its evidence with subsequent motions or at trial.

B. Motion to Strike

Hughes moves to strike the affidavits of David Schoeggl. The affidavits, argue Hughes, contain unsupported conclusions. In the alternative, Hughes requests an opportunity to have discovery on the factual assertions.

The Court has reviewed the affidavits. While they are questionable in that they summarize and arguably interpret the many policies, the Court will not strike the affidavits. The Court is cognizant of the alleged deficiencies. The Court's rulings, as contained herein, do not rely on Mr. Schoeggl's affidavits as substantive evidence. Accordingly, to the extent they are deficient, they have not harmed Hughes.

II. SUMMARY JUDGMENT STANDARDS

Summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

The initial burden rests on the moving party to point out the absence of any genuine issue of material fact. Once satisfied, the burden shifts to the opponent to demonstrate through production of probative evidence that there remains an issue of fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

A party opposing summary judgment may not rest on its pleadings. Fed. R.Civ.P. 56(e). Although reference is made to the movant's "burden," Rule 56 places no evidentiary burden on the moving party beyond that which is required to prevail at trial. Therefore, while it is incumbent upon the adverse party to offer evidence sufficient to raise a genuine issue of fact on an issue on which that party has the burden of proof, the moving party need provide nothing more than a reference to those materials on file in the case which supports the movant's belief that there is an absence of any genuine issue of material fact. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990).

When judging the evidence at the summary judgment stage, a district court is not to make credibility determinations or weigh conflicting evidence, and is required to draw all inferences in a light most favorable to the non-moving party. Id.

Summary judgment is appropriate "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. (quoting Celotex Corp., 477 U.S. at 322, 106 S.Ct. at 2552).

The ultimate question is whether the evidence "presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). The mere existence of a scintilla of evidence in support of the non-movant's position will be insufficient; there must be evidence from which the jury could reasonably find for the non-movant. Id. at 252, 106 S.Ct. at 2512.

Finally, if the factual context makes the non-movant's claim implausible, that party must come forward with more persuasive evidence to support its claim than would otherwise be necessary. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

III. INSURANCE CONTRACT INTERPRETATION

Several recurring legal issues appear throughout the many summary judgment motions. Because the Court will grant Hughes' motion to apply California law to the INA policies, both Arizona and California law is discussed.

A threshold question is whether the disputed-policy terms are ambiguous. The question is one of law to be determined by the Court. See, e.g., Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 647 P.2d 1127 (1982).

A. What is an Ambiguity?

Arizona courts find an ambiguity as a matter of law "where various jurisdictions reach different conclusions as to the meaning, intent, and effect of the language of an insurance contract." Federal Ins. Co. v. P.A.T. Homes, Inc., 113 Ariz. 136, 138, 547 P.2d 1050, 1052 (1976).² The Federal Ins. Co. rule is not applicable where Arizona courts have ruled on the disputed terms. See, e.g., Behrens v. Aetna Life & Casualty, 153 Ariz. 301, 736 P.2d 385 (Ct. App.1989).

Where courts have yet to take a position, Arizona courts must apply the words' ordinary meanings. See, e.g., Millar v. State Farm and Casualty Co., 167 Ariz. 93, 804 P.2d 822 (Ct.App.1990). In determining whether there is an ambiguity, the court should examine the language from the standpoint of one not trained in the law. See, e.g., Sparks. The Court will consider, however, the parties' relative sophistication when examining the contract's ambiguous character. Cf. Darner Motor Sales v. Universal Underwriters, 140 Ariz. 383, 391, 682 P.2d 388, 396 (1984).

California courts take a slightly different approach. The disputed terms must be susceptible to more than one reasonable meaning. Reserve Ins. Co. v. Pisciotta, 30 Cal.3d 800, 640 P.2d 764, 180 Cal.Rptr. 628 (1984)). "Words used in an insurance policy are to be interpreted within the plain meaning which a layman would ascribe to them." Reserve Ins. Co., 30 Cal.3d at 803, 640 P.2d at 767, 180 Cal.Rptr. at 631. The plain meaning must be evaluated in light of the insured's objectively reasonable expectation. Insurance Co. of N. Am. v. Sam Harris Constr. Co., 22 Cal.3d 409, 583 P.2d 1335, 149 Cal.Rptr. 292 (1978). Such a rule is designed to discover the parties' mutual intent. AIU Ins. Co. v. Superior Court, 51 Cal.3d 807, 799 P.2d 1253, 274 Cal.Rptr. 820 (1990).

B. What is the Effect of an Ambiguity?

Arizona courts, unlike many others, do not automatically construe ambiguous insurance terms against the insurer. Rather, "the rule in Arizona is that we construe a clause subject to different interpretations by examining the language of the clause, public policy considerations, and the purpose of the transaction as a whole." See State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 257, 782 P.2d 727, 733 (1989) (citing Arizona Prop. & Casualty Ins. Guar. Fund v. Helme, 153 Ariz. 129, 135, 735 P.2d 451, 457 (1984)). Further, "the existence of ambiguity that militates in favor of construction against the drafter can be determined only after these questions have been answered." Wilson, 162 Ariz. at 257, 782 P.2d at 733 (emphasis added).

Under California law, an ambiguous term is construed differently. Any ambiguity is to be resolved against the insurer. Reserve Ins. Co., 30 Cal.3d at 804, 640 P.2d at 768, 180 Cal.Rptr. at 632. The Court's "function is not to select one particular definition ... but rather to apply from among the range of reasonable meanings the definition which most favors coverage for the insured." Reserve Ins. Co., 30 Cal.3d at 806, 640 P.2d at 770, 180 Cal. Rptr. at 636. The "contra-insurer" resolution of ambiguities does not apply where the policy is the product of even-handed...